As we age, our bodies will slowly begin to slow down. We become more prone to injuries and disease. Generally, as we get older, we have a higher risk of health issues materializing. As a result, many seniors will go to doctors and other specialists much more frequently than younger people.
Health insurance is vital as people utilize the medical system more frequently as we get older. While many of us take for granted, as most people know that those age 65 and older have Medicarefor their health insurance, this was not always the case.
President John F. Kennedy attempted to get Congress to pass a health insurance program for seniors. A study at the time showed 56% of Americans age 65 and older had no health coverage.
LBJ Presidential Library
Congress passed a bill that President Lyndon B. Johnson signed into law in 1965, creating Medicare. Today over 60 million Americans are receiving health coverage through Medicare.
However, the basic Medicareprogram will not always cover everything they need because of build-in deductibles in coverage. First, let's look at Medicareand its four parts:
The A, B, Cs of Medicare
- MedicarePart A – MedicarePart A is your hospital coverage. It pays for inpatient hospital stays and a limited number of days for skilled nursing home care. It will pay a limited amount of in-home care following a qualified surgery and hospice.
- MedicarePart B – Part B is coverage for doctors and regular health care services. Part B covers outpatient physician and nursing fees. It will also cover the full range of services like diagnostic testing, x-rays, and renal dialysis. There is a limited amount of coverage for medical equipment as well.
- MedicareAdvantage (Part C) – Part C is commonly referred to as MedicareAdvantage. Think of it as a complete package that combines everything - including coverage the supplement of the Part D drug plan would cover. Sometimes the premium is low or non-existent; however, you often must receive care in a limited HMO.
- MedicarePart D – This is your coverage for prescription drugs. Part D was created during the George W. Bush administration and gives seniors drug coverage that previously did not exist outside a select few plans (like from unions and certain government retirement plans). There are stand-alone Part D plans with multiple insurance companies participating. Every company offers different pricing and is related to discounts they can pass along depending on deals they negotiated with specific pharmaceutical companies. Twenty-five million Americans have stand-alone plans, and twenty million have Part D coverage as part of MedicareAdvantage.
MedicareSupplement plans (or Medigap) cover the gaps in Medicare. However, to get Medigap, you need to have MedicarePart A and B in place. There are a variety of Medigap plans that are standardized. Medigap Plan A is the same in terms of coverage no matter where you get it (except for a few states like Minnesota, Massachusetts, and Wisconsin).
Now, just because they are standardized in terms of what they offer, their premiums are not. These will differ depending on the pricing policy that is used. The pricing policies insurance companies use are community-rated and issue-age-rated or attained-age-rated. Your region (based on zip-code) where you live and the insurance company you select also impact the premium.
Medigap plans will not cover things like vision, dental, prescription drugs, or hearing. So, if you want those covered, you will have to go a different route. You can select any Part D prescription drug plan and combine it with any Medigap plan. However, some people will choose MedicareAdvantage, which will cover almost everything in some cases.
In some cases, they may need something to fill the coverage gaps. Two of the most popular options are supplemental health insurance for seniors or a MedicareSupplement plan. But what is the difference, and which is better?
Do not confuse this supplemental insurance with MedicareSupplements (Medigap). This type of insurance can be purchased at any time and is often things like dental insurance, a vision plan, or even a hearing plan.
These are great options for the senior who wants to customize their health insurance more. You can pick and choose whether you only wish to have a vision plan, want a combination of dental and vision, or any several other types of available plans.
Some companies offer short-term nursing home and assisted living coverage and short-term in-home care. Usually, this coverage is limited to one year of care and should not be confused with Long-Term Care Insurance, which is often purchased when you are younger and covers more extensive long-term health care services.
Many people are unaware that Medicare, including Medigap policies, will only pay for a limited amount of long-term care services. According to the LTC NEWS Cost of Care Calculator, long-term health care costs are costly and vary depending on location. The short-term plans can help, but if you have savings to protect, you should consider LTC Insurance, ideally in your 40s or 50s.
Different insurance companies offer different plans with various price points.
The costs of these plans will vary depending on a few factors. These include where you live, your age, the type of plan you select, and of course, the insurance company. Be sure to shop around to ensure you are getting the best deal and find the right option for your needs. In general, these plans are quite affordable as their coverage is limited and very specific in nature.
You have several choices when you enroll in Medicareand consider all these options. While the cost is one thing to consider, be sure to look over any plan's benefits before deciding to go with it. Always read the fine print and be aware of what is covered and what isn't. If you're not sure which is right for you, don't hesitate to reach out to a professional or expert in your area who can help.
No question, as we get older, we experience changes in our bodies. You have noticed it, perhaps as early as age 30. With age, we face changes in our health. Your 50s are called the "fragile 50s" for a reason. Your 50s is the time many people start to notice significant changes in health. The changes can include high blood pressure, arthritis, back and joint problems, to name a few.
The financial costs and burdens of aging have substantial consequences on your income, assets, lifestyle, and legacy. Preparing your family and finances for future long-term health care is a critical part of your retirement plan.
Affordable Long-Term Care Insurance should be put in place before you retire, ideally in your 40s and 50s. These policies are medically underwritten and priced based on the age and health when you apply for coverage.
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This comprehensive guide is an outstanding first-read - The Ultimate Long-Term Care Guide. Be sure to take notes so you can ask the appropriate questions when you speak with a qualified and trusted Long-Term Care Insurance specialist.
This conversation is one you should have with a specialist as most financial advisors, or insurance agents lack the knowledge required in underwriting, policy design, tax implications, and claims. Find a specialist who works with the major companies by clicking here.
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